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Wednesday, April 24, 2013

New Home Sales Back on Track in March

New home sales rose to a 417,000-unit pace in March, driven by sales in the South and Northeast. The supply of new homes available for sale remains tight, as inventory was unchanged at 4.4 months’ supply.

Thursday, April 18, 2013

Wells Fargo Housing Chartbook - March

We have raised concerns over the past few months that the influx of investors into the housing market may be exaggerating the extent and magnitude of the recovery in home sales and home prices. Much more has been made of this issue in recent weeks, and some headlines have even raised the specter of another housing bubble. While some markets and submarkets have a bubble feel to them, we see the more likely outcome as a bubble within the bust that supports a temporary spike in home prices. As interest rates increase, the risk-adjusted returns offered from converting single-family homes to rentals will diminish, and investor purchases will likely recede.

VIDEO: Wells Fargo Monthly Economic Outlook - April

Friday, April 12, 2013

Housing Starts Update

Housing starts in the first two months of the year downshifted as
higher permitting fees and unseasonably warm weather created a
rush to start new homes in December. Looking through the
seasonally noisy winter months, the trend for new home
construction remains up. Total housing starts over the past year
rose 28 percent with single-family starts up 32 percent. In addition,
the supply of new homes for sales remains historically low, which
should support new building.

The pace of housing starts should pick up in March as the spring
building season kicks into gear. Permits in February were higher
than starts, suggesting a pickup in starts in the near-term.
Furthermore, despite the dismal March employment report,
construction firms added 18,000 new workers. We expect starts to
trend higher this year, averaging a 980,000-unit pace.

Friday, April 5, 2013

Construction Spending Remains on Track in February

Following a decline in the previous month, construction spending rose 1.2 percent in February. Residential increased 2.0 percent on the month and nonresidential rose 0.7 percent. Public spending was also up.

Single-Family Posts Eleventh Straight Gain Construction outlays rose 1.2 percent in February to a $885.1 billion annualized pace, which was roughly in line with consensus expectations. Private residential rose 2.2 percent with single-family outlays up 4.3 percent in February, the largest monthly gain since August 2009. Based on monthly housing market indicators and solid momentum in household formations, we expect residential will continue to improve.

Nonresidential Outlays Reverses Decline Private nonresidential spending rose 0.4 percent in February and is now up about 6 percent on a year-ago basis. The largest gains were in power, manufacturing, commercial and lodging. We expect commercial and lodging will continue to buoy the headline throughout the year, with power and manufacturing modestly improving. Regarding public outlays, state and local rose 1.1 percent, while federal spending showed weakness.